Myanmar deal slips through MTN’s fingers

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Asha Speckman

Africa’s hope for a slice of Myanmar’s lucrative telecoms industry was dashed yesterday, as a proposal by an MTN Group-led consortium was among those the south-east Asian government rejected in favour of Norway’s Telenor and Qatar’s Ooredoo Telecom.

It would have been MTN’s boldest step out of its comfort zone in the Middle East and Africa, where it had made billions of rand worth of returns from device sales and cellular network services. The licence in Asia would have positioned MTN as a true global player, as it approaches its 20-year milestone next year.

Securing Myanmar, where only about one in 10 people in a country of 60 million has a cellphone, would have been a personal victory for chief executive Sifiso Dabengwa, who has to achieve new growth in a cut-throat environment and climate of dwindling transformational acquisition opportunities.

Dabengwa was promoted to chief executive from chief operating officer in 2011, but has yet to deliver a new market to MTN’s stable of 22 operations. He risks living in the shadow of his predecessor, Phuthuma Nhleko, who has returned to MTN as chairman.

Myanmar is another in a series of failed attempts to clinch high-profile deals since the unsuccessful merger with India’s Reliance Communications in 2008 and a $23 billion (R232bn at yesterday’s rate) tie-up with Bharti Airtel, now one of MTN’s largest rivals, fell by the wayside in 2009.

MTN congratulated the winners, adding that it still considered Myanmar to be an attractive market.

“We will review other options as they become available, and make a decision after the appropriate due consideration,” the company said.

If the 4 percent hike in the share price to R180.84 during intraday trade is any indication, investors were relieved by the news. Shares closed at R178.77 yesterday, 3.08 percent up.

Mvunonala Asset Managers portfolio manager Farai Mapfinya said: “We think it reduces the risk that has long been associated in operating in emerging markets. The move was perceived as adding more risk to an already ‘risky’ portfolio of businesses.”

“The market will likely re-rate the stock, firstly, because of the risky element being removed and, secondly, it gives scope for increasing cash shareholder returns in the form of dividends, either special or an increased pay-out ratio,” he added.

MTN had poured money into a massive awareness campaign in Myanmar earlier this month, and promised skills and new technology to the country.

Spiwe Chireka, a manager at the International Data Corporation, said MTN’s defeat was not a surprise.

“MTN had the money and emerging market experience, but they were up against more formidable players,” she said.

A France Telecom-Marubeni Corporation group was named as a back-up in case one of the winners did not fulfil the tender requirements.

The Myanmar government said it would finalise and award the licences soon according to a telecoms law that parliament expected to adopt in the near future. – Additional reporting by Bloomberg


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